Fuque Inc. uses the retail inventory method to estimate ending inventory for its monthly financial statements. The following data pertain to a single department for the month of October 2026.

Instructions

a. Using the conventional retail method, prepare a schedule computing estimated lower-of-cost-ormarket inventory for October 31, 2026.

b. A department store using the conventional retail inventory method estimates the cost of its ending inventory as $60,000. An accurate physical count reveals only $47,000 of inventory at lower-of-costor- market. List the factors that may have caused the difference between the computed inventory and the physical count.

Inventory, October 1, 2026 At cost At retail Purchases (exclusive of freight and returns) At cost At retail Freight-in Purchase returns At cost At retail Markups Markup cancellations Markdowns (net) Normal spoilage and breakage Sales revenue $ 52,000 78,000 272,000 423,000 16,600 5,600 8,000 9,000 2,000 3,600 10,000 390,000